Connected things – 2016 edition

The 2016 edition of the ‘Connecting things’ report by Arthur D Little, commissioned by Telia Company, lays out how connected things are transforming business, society and the way we live.

The Internet of Things (IoT) revolution has just started, but it is already driving the digital transformaiton of industries and society. It creates a new digital business logic, to which all industries must adapt in order to capture new value opportunities and ensure future competitiveness. What used to be long product development cycles are now continuous upgrades, jointly innovated with customers and partners. What used to be products are now sold as services. What used to be proven business models are now increasingly under pressure. At the same time, innovative new players are emerging across the IoT ecosystem, driving radical new product offerings in new value networks. It is a time of rapid change and innovation and much like the industrial revolution before it, these are defining years. The ability of companies to embrace new technologies will decide who will be the digital leaders of tomorrow.

This year’s Consumer Electronics Show (CES) in Las Vegas highlights how the explosion of IoT devices continues. This is an extension of a trend that has been seen for the last three to four years, with the IoT as a major driving force for new products and services. Leading consumer brands such as Under Armor, the sports clothing and accessories company, are taking new bets via M&A activities. They are investing to enhance their customer propositions with complementary services in health monitoring and lifestyle.

Yet, the more significant development in the IoT since last year’s Connected Things report is the surge in business-to-business related IoT offerings. New customer offerings are provided and businesses operations are transformed as an unprecedented number of companies make launches involving IoT. This development is taking 5 different forms and names in different industries: industry 4.0, digital health, and intelligent transportation systems (ITS) are but a few examples.

Another key theme in the market at present is big data along with the issues of collecting it, securing it, storing it, analyzing it and monetizing it. The auspicious analogy that “data is the new oil” may have caused some confusion as the Brent barrel price continued to tumble on the global markets in early 2016. Yet, data and analytics are becoming integral in product development, customer analytics and more. Leading players in this area, such as IBM, claim to have surpassed USD 30 billion investments in data analytics. Alongside this development, the debate about security and user data is picking up speed. Privacy issues are at the center of the IoT, and in the debate regarding handling of data there are winners and losers. In effect, transparency about data and how it is managed, along with opt-in offerings are becoming the new selling point for customers.

Leading companies in all industries as well as ICT leaders continue to explore opportunities in the IoT; both “vertical” IoT solutions (e.g. specific healthcare solutions) and “horizontal” (e.g. IoT device management platforms). In 2015, Tesla launched its self-driving car through a software update. Just by letting the car wirelessly perform a software update, drivers can now press a button and the car will take control and drive itself. Not only can Teslas drive themselves, some owners have reported that since the update, the Teslas have improved their driving skills. Other recent developments include Google’s launch of Brillo, the embedded operating system for IoT devices. Similarly, Microsoft released Windows 10 IoT, which is optimized to be used for IoT purposes in smaller devices – with or without a display.